- Gold struggles to extend post-Fed gains amid cautious optimism.
- Fed matched market forecasts of faster tapering and firmer dot-plot, ECB is up for conveying PEPP deadline.
- Eurozone economic forecasts will be the key, PMIs, risk catalysts may entertain traders.
Gold (XAU/EUR) grinds higher around €1,580, up 0.24% intraday heading into the key Thursday’s European session.
The yellow metal prices in Euro refreshed a two-week low the previous day before bouncing off and portraying a daily positive closing amid the overall recovery in market sentiment post-Fed.
That said, the market’s surprise reaction to the US Federal Reserve’s hawkish halt could be linked to Fed Chair Jerome Powell’s comments like “the Omicron variant poses risks to the outlook”, as well as refrain from rate hikes until the tapering is completed.
Following that, Omicron woes join the escalating tussles between Beijing and Washington to test the market sentiment during the lackluster Asian session. The US push for the Uyghur Bill and Beijing’s rush to control data companies are the latest factors portraying the cold war.
Amid these plays, US Treasury yields struggle to extend the previous two-day advances while the stock futures in the West print mild gains by the press time.
Moving on, preliminary readings of the December month PMIs could entertain the XAU/EUR traders but major attention will be given to how the ECB policymakers confront the hawkish calls amid Omicron fears.
Read: European Central Bank Preview: More recalibration or actual tightening?
Technical analysis
An upward sloping trend line from late September, around €1,565 defends gold buyers of late.
Given the RSI recovery supporting the XAU/EUR run-up, the gold prices are likely to cross the 100-SMA immediate hurdle surrounding €1,580. However, any further upside will be challenged by the 200-SMA level near €1,590, followed by the €1,600 threshold.
In a case where gold buyers dominate past €1,600, the late November’s swing high near €1,610 and the €1,615 level may entertain the bulls before directing them to the last month’s peak of €1,653.
On the contrary, a clear downside break of the stated trend line support of €1,565 will make the quote vulnerable to drop towards the monthly low of €1,555.
Though, multiple supports around €1,550 will test the XAU/EUR bears past €1,555, a break of which will highlight November’s low of €1,519.
To sum up, XAU/EUR remains firmer ahead of the key ECB meeting.
XAU/EUR: Four-hour chart
Trend: Further upside expected
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